Minimizing the Price of Tranquility: How to Discourage Scotland's Secession from the United Kingdom
What some view as overly-generous funding of the Scottish parliament results from Scotland.s credible threat to secede from the United Kingdom. Scotland is shown to benefit from a second mover advantage in a non-cooperative sequential game over the allocation of public funds. Various reform proposals are criticized for not recognizing that reform of Scottish government finances must be consistent with Scotland.s credible threat. Fiscal autonomy -- in which the Scottish parliament finances a much greater proportion of its spending from Scottish-sourced taxes, is demonstrated to be a viable reform within the existing political context and, in some circumstances, could remove Scotland.s second mover advantage. We also use a cooperative bargaining game model to demonstrate that an Australian style grants commission would not be a viable reform in the British context.
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- P Hallwood & R.MacDonald, . "A Restatement of the Case for Fiscal Autonomy (or: The Barnett Formula - a formula for Rake's Progress)," Working Papers 2006_14, Business School - Economics, University of Glasgow.
- Paul Hallwood, 2007. "From Tranquility to Secession and Other Historical Sequences: A Theoretical Exposition," Working papers 2007-35, University of Connecticut, Department of Economics.
- Ronald MacDonald & Paul Hallwood, 2004. "The Economic Case for Fiscal Federalism in Scotland," Working papers 2004-42, University of Connecticut, Department of Economics.
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